Is a tech “Unicorn” a unicorn no matter the size of its valuations? According to The New York Times, not all are necessarily equal. Sure, we associate these billion dollar-plus companies with the likes of Uber, Airbnb, and Pinterest, but it’s not necessarily due to what people would traditionally associate with being “highly innovative”.

Unicorns are seeing their valuations inflated due to the terms of the private investments these companies have received with very few actually disclosing the details to the public. The New York Times cites cloud storage and software provider Box as an example, saying that it raised $50 million in capital in July 2014 from Coatue Management and TPG Capital at a reported valuation of $2.4 billion:

Under terms of their investment, Coatue and TPG were entitled to receive additional shares if Box later went public at a lower price, and a 10 percent discount to the I.P.O. price to boot. When Box priced its initial offering at $14 a share in January, the lower price dropped the Coatue-TPG purchase price to $12.60 a share and increased the number of shares they received by 58 percent. Box’s current stock market value is about $2.1 billion.

It’s said that such investor protections, when put into place, can inflate a company’s indicated valuation by up to 25 percent. Silicon Valley law firm Fenwick & West published a report analyzing 37 United States unicorns and found five of them promised to provide investors additional shares to late-stage investors if the company’s initial offerings were priced below its pre-IPO investment valuations. Six other companies allowed their investors to block offerings below the price of their investment.

This increase in later-stage investment is a reversal from the late 1990s during the dot com boom where companies are now opting to remain private instead of going public just a few years after their founding. The New York Times says that it allows valuations to explode while investors have more of a chance to buy a piece of the share.

For founders, this should be a tale that valuations aren’t necessarily all that it’s cracked up to be. Super hot companies will see a lot of investor demand, even at later stages. But there’s a lot of risk, especially if the markets go down should the startup pursue an IPO. Therefore, the late-stage investor is inventing new structures to help them mitigate risk and come out on top. From the founders point of view, they’re thinking “hey this is great and our valuation is rapidly increasing”, but that’s in the private sector — should the market tumble, just who has the last laugh?